ESI Return Filing Process

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What exactly is an ESI Return? 

Employees' State Insurance (ESI) is self-funding health insurance and social security program for Indian employees. It comes under the Ministry of Labour and Employment. Employee State Insurance Corporation manages the laws and regulations of this ESI Fund (ESIC). All ESI-registered entities must file ESI returns due every six months. The method ensures that unforeseen events do not harm the workers and their families. 

To Whom Does It Apply?

The ESIC is applicable to all businesses with ten or more employees, and it benefits all employees earning Rs 15,000 or less salary per month. The employer must contribute 4.75 per cent, and the employee must contribute 1.75 per cent to the ESIC. 

ESIC's Advantages

Employees who are registered with ESIC are permitted to medical care for themselves and their families and unemployment advantages and maternity break for female employees. 

Medical Advantages 

One of the primary goals of this type of registration is to provide medical benefits to employees and workers. Therefore, if a disease or other contingency affects the workforce, the affected worker can get help right away. 

Social Security 

The government created the ESI registration scheme as a form of social security. This scheme offers social security benefits such as maternity benefits, sickness allowance, and other associated benefits. 

Effortless Processing 

This system's benefits are simply accessible at any hospital or health care facility. Therefore, all payments made using this method are eligible for reimbursement. 

Advantages related to sickness 

All employees will be provided various illness benefits due to their ESIC registration. These benefits are provided at a rate of 70% of the employer's income. If the illness lasts for three months or 90 days, this sum will be assessed and provided. 

Maternity Advantages 

Every company that participates in this programme must give maternity benefits, such as maternity leave during pregnancy. 

Disability Usefulness 

As part of the plan, Disability Benefits are also covered. The employee's dependents can claim this in an unforeseen occurrence such as permanent incapacity or death. 

Registration and Filing of Returns

The Employee State Insurance Act of 1948 requires an eligible employer to register by completing the steps below: 

  • All documentation should be kept on hand for future reference by an employer. 

  • Once it is done, an employer must file Form 1, which can be found on the ESIC portal in PDF format. ESIC will review all of the information and provide a 17-digit unique number. All filings require this one-of-a-kind number. 

  • Each employee will receive an ESI card once the employer submits the paperwork with all information. There are the documents required for registration: 

  • PAN Card of the company 

  • Business address proof  

  • The permit is issued under the Shop and Establishment Act or the Factories Act. 

  • Basic documents depend on the kind of institution. They are- Articles of Association, partnership deed in the event of a partnership, Memorandum in the case of a corporation. 

  • Limited Liability Partnership in the case of a limited liability partnership. 

  • Information of all directors, partners, and stockholders. 

  • All employees' details, including their salaries. 

  • Information about the bank account. 

The employer can file returns online after the establishment has been successfully registered. To file ESI returns online, the employer must follow the processes listed below: 

  • After registering, you'll have access to your login credentials. The same will be necessary for filing returns online. 

  • Once the login credentials are provided, the employer must log in to the official website, 

  • There is a list of actions available after he can log in using the credentials. Modify employee information, report an accident, and so on. 

  • To file the return, the employer must first make sure that all employee information is current and then file the return. 

  • After that, the employer has to fill out the bank information and submit it to file the returns. 

  • The employer can then go to the 'List of Actions' and select 'Generate Challan'. 

  • For future reference and inspections, the challan must be downloaded and documented. 

  • The website also allows the employer to perform various tasks, such as updating employee information, reporting accidents, adding new employees, etc. 

  • Employee state insurance contributions are beneficial to employees; hence, non-payment or delayed payment provisions are very strict. 

  • The ESIC half-yearly return for April to September is due on November 12th, and the return for October to March is due on May 12th. 

Consequences of Employee Contribution Non-Payment or Late Payment 

An employer is deemed to have been entrusted with the amount withdrawn from the employee's salary as an employee contribution. Subsequently, the employer takes a more significant burden of assuring that the contribution is paid with ESI. Late payment or non-payment of the employee's contribution deducted from the employee's wages is a 'Criminal Breach of Trust' punishable under IPC Section(s) 406, 409 and also an offence under ESI Act Section(s) 85 (b – g). 

Non-payments, late payments, or misrepresenting payments are all punishable under the ESI Act by up to 2 years in prison and a fine of Rs 5,000. In case an employer fails to contribute within the time limit stated, they will be subject to simple interest of 12% per year for each day of delay or default in payment. 

Penalties for Contribution Non-Payment or Delayed Payment 

For delay or default in payment of the contribution, the Corporation may charge and recover damages at the following rates, not to exceed the amount of the contribution payable, as outlined in the Regulations. For the first instance, the employer may be prosecuted under Section 85(a), and if the employer commits the same offence again, he may face increased penalties. This is because the ESI was created for the benefit and betterment of workers, and the employer is responsible for ensuring that this goal is met. 

FAQs about Bookkeeping & Accounting

Businesses that are ESI registered are required to file ESI returns every month. It is governed by the ESI Act of 1948; ESIC (Employees' State Insurance Corporation) pays benefits to employees in the event of sickness, death, disablement, injury, and other unforeseen circumstances.

Contributions to the ESI Return must be filed within 42 days of the end of the contribution period. In addition, contributions must be paid within 21 days of the end of each calendar month. Therefore, these returns must be filed every six months.

Employers have to submit a half-yearly Return of Contributions (RC) by May 11th/November 11th each year, with all columns correctly filled. An employer must file a Form-01 application for coverage under the ESI Act within 15 days of the Act becoming applicable to a plant or company.

The ESIC Return is generally filed on a half-yearly basis, which means it must be filed on or before May 11th and November 11th.

The ESIC status is checked by visiting the 'Portal Application ESIC' webpage. The Employee Portal is shown in a window. To check the status, the user has to enter his/her ESIC insurance number his IP number.

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